New home registrations showed a 44 per cent drop in 2023 compared with the previous year, according to figures released by the National House Building Council, NHBC.
There were just 105,449 registers by developers of intent to build compared with 189,009 in 2022 with the biggest decrease in the Northwest of 61 per cent. The West Midlands was the next worst hit with a drop of 59 per cent followed by the Eastern region with a 51 per cent decrease.
National Federation of Builders, NFB, policy and insight head Rico Wojtulewicz said: “The market is one element creating a registration drop, as is the reliance on big builders on large sites who are more exposed to market forces.
“However, the consequence of Covid-19 is also at play because work from home and slow planning decisions are finally filtering through. This means over the last three years fewer sites were permissioned and signed off for shovels to go in the ground and so completions have naturally reduced.”
Private sector registrations were down 53 per cent to 64,877 compared with 136,805 in 2022. The rental and affordable sector saw a shallower decline with 40,572 registrations in 2023, down 22 per cent on 2022’s 52,204.
Total new home completions were down by 12 per cent to 133,213 in 2023 compared with 151,308 in 2022.
Private sector completions decreased by 20 per cent in contrast to the rental and affordable sector which was up by a record ten per cent standing at 45,649 new homes.
NHBC chief executive Steve Wood said: “The backdrop of high interest rates, significant inflationary pressures and challenges with planning consents has suppressed private sale output in 2023.”
However, he said there were signs of demand returning and expected to seed an improved position in 2024 with consumer confidence recovering as mortgage rates start to fall.
Measures to restore consumer confidence needed
“With a general election looming, we may also see new home-buyer incentives that influence build volumes. In the mid to long-term, the industry would welcome measures that restore consumer confidence and encourage market growth,” said Mr Wood.
Mr Wojtulewicz said the return of incentives such as help-to-buy, enabling first-time buyers to purchase with just a five per cent deposit, would make a difference.
Brokers Hank Zarihs Associates said development finance lenders were worried that smaller housebuilders would continue to leave the sector without government intervention to help buyers.
The NHBC is the UK’s largest provider of new home warranties and insurance and publishes annual data on housebuilding output.